KUALA LUMPUR: Kenanga Research has put an ‘overweight’ call for the oil and gas sector given the bullish outlook for the companies as premised on clearer contract flows as the sector goes on full throttle.
The outlook is given on the back of Petronas’ continued aggressive capital expenditure (capex) spending and the government’s resumption of the plans under the Economic Transformation Programme to encourage domestic economic activities, it said.
It said that despite a marked slowdown in the second quarter this year due to the general election factor, the research house estimated that at least around RM12.4 billion worth of contracts have been awarded to Malaysian players year to date.
“We believe the contract flow will start to pick up in the second half, most notably in the hook-up and commissioning and topside maintenance and the inspection, repair and maintenance sub-sectors given that the respective contract seem to have been delayed due to the previous political uncertainties.
“Our top pick continues to be Sapura Kencana Petroleum Bhd at a target price of RM4.57 per share due to its breadth of service offerings across the value chain that will benefit the company during contract bids,” the research house said in a statement.
For the small-to-mid-cap players, the research house favoured Alam Maritim Resources Bhd at a target price of RM1.39 per share, given the vessel utilisation and the prospects for other divisions look like they are improving.
“However, we highlight that in the current bull market, laggards seem to be the likes of Coastal Contracts Bhd and Pantech Group Holdings Bhd, with target price of RM2.90 per share and RM1.18 per share, respectively,” it added. — Bernama